Why UBI and Inflation Strengthen Gold — 3 Scenarios After the Job Collapse
October 14, 2026
Mo Gawdat, former Chief Business Officer at Google X, explains why inflation strengthens gold as a protective asset: Universal Basic Income leads either to higher taxes (capital flight) or to money printing (inflation). Both deprive fiat currencies of purchasing power. Gold price October 2026: 4,225 USD per troy ounce.
When Artificial Intelligence takes over millions of jobs, one question inevitably arises: What happens to people without income? The most politically popular answer is Universal Basic Income — a basic income for everyone. Mo Gawdat analyzes three possible scenarios. None of them are pleasant. And all three end with the same result for gold.
Universal Basic Income refers to a state-funded basic income that every person receives regardless of employment. The idea is gaining global followers as AI-based automation progresses. Pilot projects are running in Finland, Kenya, and several US states.
Mo Gawdat is direct: "Universal basic income is a fancy European or American way of describing communism." He does not mean ideological criticism in the classical sense. He describes a systemic problem: Who pays for the UBI? And what happens to the system that has to pay?
If a state finances its basic income through higher corporate taxes and capital gains taxes, a cycle begins: Capitalists pay more. Some relocate sites or capital abroad. The tax base shrinks. The UBI program becomes more expensive relative to the tax base.
Gawdat describes this mechanism precisely: The economy survives on the absolute minimum — just enough to keep the population quiet. Then the capitalists say: "Why do I have to pay so much in taxes?" The cycle is not sustainable.
The consequence for investors: Higher taxes on capital gains increase the relative advantage of gold. Physical gold is tax-privileged in many jurisdictions — and is not subject to direct state seizure.
Alternatively, a state can finance UBI through money creation — central banks buy up government bonds that finance the basic income. The money is literally created out of thin air. The consequence: inflation.
When more money meets the same amount of goods, prices rise. Those who hold savings in fiat currencies lose real purchasing power. Those with tangible assets — real estate, commodities, gold — are structurally at an advantage.
Gold is historically the most reliable protection against inflation. In the last major inflationary phase of the Western world (1970s), gold rose from around 35 USD per ounce (1971, end of the gold standard) to around 850 USD per ounce in January 1980. A preservation of purchasing power that no government bond of that time achieved.
Gawdat also describes the third scenario: The West foregoes UBI because political resistance is too great. People without income, with a lot of time and "a lot of guns" (Gawdat on the USA), become a threat to social stability.
The consequence is not freedom, but control. Surveillance systems are expanded. Social unrest escalates. Capital flees to safe havens. In this scenario, gold and other tangible assets are the preferred instrument for wealth preservation — far from the reach of an unstable political system.
| Scenario | Mechanism | Consequence for Fiat Money | Consequence for Gold |
|---|---|---|---|
| UBI through taxes | Higher capital taxes, capital flight | Stagnation, weak currency | Tax advantage, capital protection |
| UBI through money printing | Expansion of money supply, loss of purchasing power | Inflation | Historically: Preservation of purchasing power |
| No UBI | Social unrest, capital flight | Political risk, currency risk | Safe haven, difficult to freeze |
Gawdat sees Western, capitalistically oriented societies as particularly vulnerable: They are most heavily oriented toward wage labor as an economic foundation. Their political system makes radical solutions difficult. And their ideology makes it hard for them to recognize UBI for what it is according to Gawdat's analysis: another word for communism.
Gold is trading at 4,225 US dollars per troy ounce in October 2026. The world's central banks are buying — this too is a signal: State institutions are positioning themselves for exactly the scenarios Gawdat describes.
Not morally, but systemically: UBI must be financed. Both paths — taxes or money printing — have side effects that destabilize the system. Gawdat sees no sustainable way to implement UBI within a capitalist framework without undermining the foundation of the system itself.
Historically, yes. The most striking case: 1971 to 1980. Gold rose from 35 USD to 850 USD per ounce, while the US dollar lost massive purchasing power. Also in other inflationary phases — Germany in the Weimar Republic, Argentina repeatedly, Turkey recently — physical gold has preserved purchasing power better than fiat currencies.
Silver reacts to inflation and currency risks similarly to gold, with greater volatility. It additionally benefits from industrial demand. In inflationary phases, silver tends to outperform gold — but also carries greater setbacks.
More on central bank gold purchases: Central banks buy gold — Record Q2 2026.
Legal Notice: This article is for informational purposes only and does not constitute investment advice. All information without guarantee. Investments in precious metals and securities involve risks. Please consult an independent financial advisor before making investment decisions.
